TRAIN bicam, real battleground, says Drilon

The Tax Reform for Acceleration and Inclusion (TRAIN) may hurdle the Senate today but the real battle is in the bicameral conference committee, according to Senate Minority Leader Franklin M. Drilon on Tuesday, as he expects "tough and tedious" debates on the disagreeing provisions of the measure.

"The bicam could prove to be the real battleground for the passage of the TRAIN because there are numerous disagreeing provisions between the House of Representatives & Senate versions," Drilon said.

The TRAIN is the first package of the comprehensive tax reform program (CTRP) envisioned by President Duterte.

The Senate and the House of Representativies will have to convene in the bicameral conference committee to reconcile their respective versions of the bill, he noted.

"The bicam will be difficult. The TRAIN is headed into a tough battle in the bicam," he added.

Senators, including Drilon, have raised concerns about the effects of the tax reform package to the poor particularly with the proposed additional taxes on petroleum products.

Among the contentious provisions of the measure, according to Drilon, are the proposed additional excise taxes on petroleum, minerals, coal, and cosmetic procedures.

Reconciling the very different proposals made by the House and the Senate on sugar and sweetened beverages, automobiles, value-added tax (VAT) zero rating and lifting of VAT exemptions, is also expected to be a very arduous task .

The Senate, in its version, approved excise taxes on petroleum products. For diesel, the Senate proposed to impose an excise taxes of P1.75 per liter of volume capacity starting 2018, P3.75 in 2019, and P6.00 in 2020, which Drilon said could "burden the poor even more."

In the Senate version however, the imposition of the petroleum taxes could be suspended depending on certain factors, namely the prices of the Dubai crude oil and the inflation rate vis-a-vis inflation targets set by the DBCC and the BSP.

Compared to the House version, the Senate version introduced lower taxes for sugar sweetened beverages, except those that use high fructose corn syrup, which shall be slapped with higher taxes.

Upon Drilon's motion, the Senate moved to adopt a 10-percent excise tax on cosmetic priocedures for aesthetic purposes.

Drilon would have wanted a 20-percent excise tax, saying "it is unjust and against the principle of equity" if the Filipinos, particularly the poor, would suffer from higher taxes on fuel products, while the rich are not imposed additional taxes for consmetic surgeries.

The Senate also approved a 3,000-percent increase in coal taxes, to be implemented in three tranches until 2020 - from the current P10 excise taxes in coal, which will be increased to P100 in 2018, P200 in 2019, and P300 by 2020.

The chamber also doubled the excise taxes on minerals and mineral products and quarry resources aimed towards responsible mining and environmental protection.

Another Senate initiaive is the proposed exemption of prescription drugs and medicines from value added tax.

Also expected to be subject of debates are the earmarking provisions of the bill, as well as the exemptions provided to various sectors, among others. The Senate version has approved to earmark 60% of the incremental revenues to infrastructure, 13% to the military modernization program, and 27% to social mitigating measures.

Drilon noted that the DOF has previously conceded the possible adverse effects of the petroleum excise taxes on the poor but has offered the earmarking provisions to cushion these anticipated effects.

"With the reduced earmarking for social mitigating measures, it is not certain how the poor can cope with the increase in the price of fuel, and with it, of other commodities," Drilon said.

If both chambers fail to arrive at a compromise on every disagreeing provision of the bill, Drilon said there could be lengthy debates that could derail the approval of the measure that is targetted for implementation by January 2018.

Drilon also asked the public to continue to monitor the proceedings in order to ensure that the TRAIN's final output will be to the best interest of the public.